Household debt is a huge indicator when comparing one's economy. Why do you think the Philippines has a low household debt? Let us know your thoughts down below!
Those are are poor cant afford a house. There are 20 million Filipinos living in abject poverty, living on $1,42 a day. And there are 4.5 million homeless in the Philippines. So the debts relating to home mortgages are low. 80% of Singaporeans live in affordable public housing and 90% own their own homes. The repayment of the loan instalments are service mainly from the Central Provident Fund, a form of national savings. So there is less chance of problems like default,. A home is an investment an asset not expenditure. Only those who borrow for spending like using credit card borrowings for unbridled consumption, on entertainment, travels, buying luxury goods etc are at risks of financial difficulties.
Debts are also and indicator of credit standing, Those who have no money have no debts because no one will lend them any, Thats why most of the rich are the ones who have debts, It is not debts that is a problem per se, but how it is managed and the capacity, capabilities of repayment that matters, For those with mortaga homes it is good as property prices tend to increase over time, Many Singaporeans profited from this, from capital appreciation. This, provide one overstretched oneself financially. And if worse come to worse, a house can be sold and the proceeds will generally be more than the debt, in part because of the minimum deposit on purchase, Besides improving the income of Filipinos, the government should build public housing for its people. Now many people like live in squalor whilst luxurious "citiies" are only build only for the rich,
@@jsanon1634 You are very wrong. Most Filipinos live in rural areas, and when they build houses, they prefer to pay in cash or build slowly so that their income can support it rather than borrow or have loans. I myself am an example. I'm an overseas Filipino working abroad and I have three houses back in the Philippines. Two of them are those I built from my own money, while the other one is from my loan . The Filipino people's mindset is " better to live in a simple way than to live and act like a rich person because of the debts."This days In the Philippines, you can see a lot of rich or middle-class people. We do have many homeless before but now in the Philippines the government have lots of new projects like the Tondominiums. for the homeless and For the people that live in slum areas in Tondo, they now have free houses given to them by the national government and the local government of Manila. Those who live in slums in the cities have homes in the provinces too so those who wanted to go back home and start new life the government are encouraging them to go home in their provinces.
@@katribo1185 Most Filipinos live in rural areas u said. U are wrong. Most Filipinos want to work and live in urbanized areas. Metro Manila with only a land area of 620km2 a population of over 13 million people or more than 12% of the entire population of the Philippines According to the PSA, in 2020, 58.93 million or 54.0 percent of the total 109.03 million population of the Philippines lived in URBAN barangays Article: Urban Population in the Philippines (Results of the 2020 Census of Population and Housing) PSA Also cities in the Philippines generate more than 70 percent of the national GDP with Metro Manila dominating MORE THAN HALF of it. The seven largest cities host 54 percent of formal jobs in the country. Article: Filipinos living in urban areas to double to 102M by 2050 WB The urban population will continue to grow Article: Filipinos living in urban areas to double to 102M by 2050 WB
@@katribo1185 The mindset u mentioned is nothing unusual and is typical of the elderly older folks esp retirees in like every country. But people, especially the young want to work in the cities and live there, not in some rural remote areas like farms. This can be seen by the number of people who migrate to the cities like Manila. Problem is many are poor cant afford to buy a house and end up living in slums or squalid housing. There is little or no choice as there is scarcity of cheap affordable public housing available. Tondominiums, Binondominiums and Basecommunity are just small limited developments. They only offer only a few hundred flats or houses for only like over a thousand people in apartments build over two years. Just take ONE slum like Tondo which have over est 600,000 people. At such a rate of development, it will take like more than 100 years to provide housing just for them!! lol. According to PSA there are 20 million poor people and 4.5 million homeless people in the Philippines.
There are a lot of reason for this: 1. Culture - we have no problem living with our parents even if we're married so getting a mortgage is not a priority 2. 10 million Overseas Filipino Workers - with $30 billion dollars in remittances every year no need to take on debt 3. Loans approved are mainly based on capacity to pay. Most public and private lending agencies only allows a loan with amortization not exceeding 20% of gross income.
@jana catudan Motrgage is a legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.
May I know how much is the typical annual interest rate and compounding frequency like an interest rate of “18% per year compounded monthly” ? thank you
I didn't see anyone in the comment yet mention the loan shark debt or what is colloquially called in the Philippines as "5-6". Basically, it's an unregulated system where loaners (usually foreigners like Indians and Chinese) approach or make themselves available to the populace and provide them with easy loans with high interest rates. You see them go around in motorcycles the whole day collecting payment from mostly poor to middle income individuals and small businesses. The system has been around for so long and sometimes it is the only way Filipinos can get cash to do something, and it's sad that more legitimate entities never stepped in to fill the void to help grow the middle-class.
5'6 is illegal and you can literally refuse to pay without legal problems, although I wouldn't say the same about them harassing you and endangering your life.
There are more and more Financial instruments now that are popping up where people can take out loans of finance whatever venture they want. Just those apps Gcash, and PayMaya that were mentioned, these apps now have a credit systems that people can use to pay bills, it's probably not as sophisticated as first world countries, but it's already a great help for the working class.
I'm one of those filipinos who has 0 debt. I guess it's my parent's upbringing that i absolutely avoid having a debt as much as possible. I think the key is responsible spending depending to your income. Phones, house, vehicles etc are all paid in full everytime of purchase. I'm currently 33 yrs old and if i hit my targets i would be financially free at 38-40 yrs old.
Agree. I won’t be buying something over my salary and will only be paid by credit card. No, I’ll better wait till I can buy it fully. I don’t like the idea of paying monthly mortgage or fees.
Yodepuga, sanaol meg ba. But that's really true, it's parental upbringing. I'm 26 years old I've incurred a sizeable amount of debt because my mom pressures me into things like helping my dad or her out. It's kinda sad actually, but I believe that I have a responsibility to them, utang ng loob and all, but I also seem to see how they've poorly managed their finances and how it affects us as their children.
@@agnusdeiquitollispecatamundi most filipinos don't have enough knowledge to manage their finances. Even i started late and still learning, schools or parents also doesn't teach us about that. Maybe the disgust on being an employee what drives me to learn how to manage and earn money properly. And i promise you all it is extremely hard than being an employee but it brings more fulfillment for me. I've experienced to be broke multiple times already but i juts get up and keep being positive, learn and work harder everytime
Same with me for not having debt with the help of parental upbringing, but with a twist: With the amount of work we had to do to help out in paying my parent's debts in the past, we swore to never go through that again, lol.
@@agnusdeiquitollispecatamundi No offense dude pero nagpapauto ka lang sa parents/family mo. Even sa school, turo samin dati is unahin muna sarili. As parents, obligation nila na bigyan kayo ng mga kapatid mo ng magandang buhay. Not a mediocre life. Wala kayong utang sa parents nyo. Sila tong nagpakasarap habang ginagawa kayo. Hindi nyo pinilit na gawin kayo, ginusto nila na gawin kayo. Kaya kahit piso, walang utang ang kahit sinong anak sa parents nila. Kung hindi kayo nabigyan ng magandang buhay ng parents nyo, sila ang may utang sa inyo. Mga PI na magulang yan, gagawa anak, hindi naman pala kaya bigyan ng magandang buhay anak nila. Tsk. 🤬
The reason why housing is very expensive in the philippines(and why less filipinos loan a house) is because major housing/condo developers market them to foreigners and ofws. If you go to BGC, many condo owners are chinese, americans and other foreigners. With the very expensive housing, not even middle class can afford a decent house unless both husband and wife are working fulltime which is just sad.
A husband and wife working fulltime is how the modern world works. Then again the philippines isnt modern and is a third world country. Very cash based economy as well ehich is very primitive. Here in developed nations(im in canada) no one carries cash around unless you are a stripper or a drug dealer lol. Most people just carry. A five dollar bill or something just in case but usually we just dont even carry cards even cause we can pay with our smartphones like apple pay. Our credit cards are installed on it so you just gotta tap your phone anywhere. Literally anywhere, food trucks and even people with usb on their phones if their a mobile(likes to roam a lot like a food truck) merchant of some sort
@@foodfam7651 e-wallets are actually pretty common now in phillipines, u still need to have a bit of money on hand in case you need it but almost everything can be paid through mobile phones here. It is sad that depending on ur work, modern world forces both husband and wife to work tho. Unlike the old days where one of you can work and be more than enough so one can focus taking care of their children, now both are forced to have less time with their children just so they can have a comfortable living even if that "living" is mostly spent on work than ur own family.
@@foodfam7651 Actually in payment methods PH are far ahead of Canada - everyone already has an e-wallet like Gcash or Maya and pays with the phone app, they skipped the plastic card step where CA is still stuck. And yes you can even pay stippers and drug dealers with phone app like Gcash.
Filipinos are scared of debt. Yes, housing price is expensive if you buy from Developers but most Filipinos build their own house and they build their house based on whatever budget we have. As long as we have a simple home we called our own we are happy and contented.
Avoid using credit cards and payday loans that rip you off at over %20 percent interest. Save for what you need to buy. Save for a house over the span of years and take the biggest down payment that you can possibly afford with the lowest interest possible before agreeing to any mortgage. Don't make the same mistakes that destroyed many MANY households here in the United States.
@@coffeeisthepathtovictory1290 just search what mortgage is, ah yes most of the people here doesn't like the idea of someone having possibility take the title of what you made, but I thank you for the warning.
it's both a good thing and a bad thing. It's good because we don't have that much household debt but it's also bad because if we keep getting swayed by that irrational fear, the country will never develop and gain a better footing than our neighbors. One such example of this fear being a hindrance is when Duterte pushed the Build Build Build program where many liberals and especially the media have used scare tactics to make our total debt seem like a scary monster when in reality it's not and is a good indicator that money was being well spent and will make our economy better overall especially in the long run. This is also why Pnoy was scared of getting loans because he was afraid of debt and was scared of dumb pinoys insulting him for it.
There seems to be a strong aversion to debt in the country. Debt is usually treated as the last resort, thus we get the stats where "70% of people taking debt are struggling" because most likely they were already struggling in the first place. There is a stigma that only gamblers, addicts and people in dire need for medical payments are the only people that take on debt. Taking in debt for a future investment is not a common concept within the country.
i think the local banks in the Philippines have very stringent rules in approving housing loans making it difficult for common people to avail for loans
I agree with this. My mom handles our finances and when i asked her how she was able to fund the construction of our new house, she said that having ~20% of the structure (or was it the foundation? Can't recall the details but it's still pretty significant in praxis) already laid out was a prerequisite before she was issued a loan. That was at least 13 years ago too, so the policies must have changed by then.
I own several credit cards and I always pay my dues on time. The Filipinos mindset towards personal debt is very different compared to others. I financed my own business and house purchase with my own savings. My relatives also helped out. This may sound arrogant but ordinary Filipinos do care about their honor and family name. Having a huge debt is fine as long as you can pay for it. Filipinos tend to take things slowly. We value our peace of mind more than money. May be, that's the reason why we are happier? Who knows?
"finance management is not properly taught across the population" quite true. it's not that we're oblivious about it, but most of us are just too thick. I too live in a village and most of my acquaintances here have debt problems and yet, they still smoke and drink, worse, they owe those cigs and liquors to the sari-sari stores. it also affects sari-sari store owners because of these deadbeats.
LoL! I believe this video talks about institutional debts (thru banks and other financial institutions) and not informal debts to friends and neighboring sari-sari stores but you are right, there are many thick-skinned neighbors who make utang and don't pay up. I used to run a sari-sari store myself.
Parents rather nag you on how hard to earn money, which could scare kids from learning finance from parent, rather than teaching proper use of resources.
If I may add, Filipinos, like myself are scared of debt. I will loan but I am so obsessed in paying it off.. I guess a lot of Filipinos have the mentality of not making your debt unpaid cos we value our image or character... If my mom didn't offer me to lend me money to buy a house I wouldn't have owned one.. I guess we also need to up our financial literacy so that we can be more open to debt that can actually be a good investment in the future...
Tell that to my co-workers. Hahhaa. Kidding aside, most of the banks here will only approve loans to select people who they think can pay. They have stringent processes.
Sana all makabayad eh .. may iba jan.. ahahahahaha.hihiram tapos di na babayaran.. kong pababayarin na sila..kaw pa masama... That's the negative side of Filipinos who loan or borrow money😆😆 no shame of Paying back and they make you look bad
To add from what others have already shared here, I have observed that debt/loan is somehow related with reputation. I have observed that when a Filipino builds or buys a house through debt, others are quick to discredit the effort as "cheap," and the person as "pala utang" or a debtor. I found that Filipinos detest being called. They are also weary of owing their co-Filipinos an "utang ng loob" or debt of gratitude. Also, to build your house here by your own efforts adds to one's reputation. Others will be quick to identify you as a hard worker, successful, and blessed. To build a house for your parents is, perhaps, the epitome of Filipino pride.
Most Fiipinos are okay with shared living. We can live with our in-laws, with little to no issue. We can mostly adapt. That aside, we can live on small houses within a compound. It's not uncommon to see a 400 sqm lot with 3 to 4 families living on it, mostly relatives, on small houses sharing a garage, lawn, and sometimes the kitchen.
Thank you for covering this topic. There's a lot of reasons why Philippines have a lower household debt compared to other countries, like the current bank policies and the culture. Banks thoroughly screens the loan applicants, to assure that it will be paid on time. In terms of culture, a lot of filipinos don't like to have debts, due to the lack of knowledge on financial literacy and the mindset that borrowing money is a very risky transaction that should be avoided at all cost. If the government prioritizes on educating our citizens on financial literacy, proper taxation, assist on establishing local businesses, and eradicate the corruption in our government (to properly execute the projects that will greatly benefit the citizens) we can significantly improve the lives of filipinos and the whole economy.
that type of education should be the responsibility of schools whether public or private. Even if they invest in Education, it would be shhhtttt if the ones teaching them are communists who also have the same dumbb mindset of "mUh dEbT bAd!".
Being scared of debt is likely caused by loan sharks in the past, and I'm not talking about the typical ones in the cities. I live in the rural areas of the country. Since the old days, people here have been scared of debt because of the "sumpa" or "barang" cast upon them if they fail to pay up. Even nowadays, people are still scared pf these curses.
Filipino here, as for my perspective I don't have anything against debt since there's good debt, however I'm quite conservative with money and I'm also scared of debt. So as of now, my only debt is my phone which I pay by installment for a year but I only have to 2 payments left after that I can already breath because I'll be debt free by that time. Lol! As for my university, we don't have student loan here so I labored thru scholarships and part time jobs. I graduated debt free. For now, I'm saving aggressively b'coz I wanna have my own house, and I wanna use my savings and if I have to take out a loan for that, it will be lesser because I'm scared of the interest, I'm scared I might not be able to pay it off.
@@xygog2408 yeah, so you can see the difference of debt here in the Philippines and other countries. I consider my phone as debt since I haven't paid it off yet, it's a liability for me where as that's not how you see it in other countries.
@@justgoabby what he possibly meant is why spend much for phones. For me, its a necessity and spreading it over a period of time is manageable in my finances.
@@paulvicentevcurimao5596 oh is that what he means? Why I'm spending much on phone, ?well,, coz, it's I like to have nice phone and I can pay for it but in my personal persperctive with finance, I still consider it debt until I pay it all off.
My parents started with a hut, then they slowly built from there. Now my father is retired and used his retirement money to build us his children houses. The total debt I have right now is around 3,410.71 USD.
Filipino culture sees debt as a very bad thing, whether it's personal or even government debt. Another thing is that most Filipinos don't have or are not qualified to have credit cards. Banks are super strict on who they approve to get credit cards. If you do get one, you start off with a very low credit limit.
The expensive housing mentioned are those that you buy from developers most filipinos prefer to build their own houses, hiring the workers and buying the materials themselves, this can result in total housing prices being somewhere between 1/3-1/2 of a comparable house bought from developers.
The video failed to factor in the high interest rate of loans in thePhilippines. My last car loan was at 12%. Housing loans are also around that. Informal loan sharks charge 5 ~ 20% per month!
Modest housing loans in the Philippines are mostly acquired thru gov't agencies like SSS and GSIS, payable up to 30 years, I believe, hence the possibility of defaulting is much lower. Culturally, the average Filipino takes pride in paying up such debts or living debt-free later in life.
Student Loans mainly does not exist in Philippines either due to Scholarships or Cheap college provincial tuition fees or if they can’t really afford college they would skip it go straight to Blue collar jobs-Delivery drivers, Fast-food staffs, Agriculture, Maintenance, Store clerks, Sari sari store, Ukay ukay sellers, online sellers, Pedicab, jeepney drivers, karendirya, Cleaners, Skilled workers etc. and the most famous job that does not require College degrees--- Tambay and household Maritess
Thats because bulk of the debt in the philippines is informal. Thats why its not reflected in the official statistics. Most of the people i know have debt with loan sharks, friends etc.
Buying house in the Philippines is not much of the problem even you are earning the minimum wage. The problem is the location of the house. The houses in provinces are a lot cheaper than houses in Metro Manila, the nearer to the center of economy the higher the price.
As an economist who has also lived in the provinces I am *highly* suspicious of macro data from the Philippines. From what I have seen informal, unreported economic activity far exceeds formal, reported activity. The majority of debt is not reported nor does it involve any formal financial sector institutions.
A lot, I mean a lot of debt is informal, usually debt to friends, family members, and freelance lenders. The interest rate is "interesting" ranging from 0% up to 20% up, and time limit to pay when you can to due date with couple of days allowance.
The reason it's usually ignored though is because aside from the fact that it's more difficult to track, it doesn't really matter on the industrial level. It may affect individuals, but it doesn't affect the financial institutions. When the financial institutions are affected, that's when we get things like bankruns and collapse of major businesses leading to unemployment.
Part of it is also because most don't pay everything by credit card. Most Filipinos pay in cash and you can pay via cash with almost everything there. In the US, its the opposite. Most people rely on credit cards a bit too much and most I find (usually the youth) are less financially responsible. Not only that I notice less establishments accomodate for cash now which can be a good thing and bad thing. In my experience, paying with cash helps you physically see how much you spend in general. I understand why it's not as reliable too but when it comes to learning about money, physical payment helps a ton in visualizing
There’s a saying in the Philippines “ when the blanket is small try to fit in it“ its mean if you don’t have money to spend just be grateful what you have.
Housing loan rates in Singapore is around 2%, how can you take debt in PH when the interest rates goes up to 15%? You will rather save up cash and buy property In cash.
Agree.. their home loan interest ranges around 6 to 8 percent.. thats quite high for a 20 year max to pay mortgage.. shorter period higher rapayment.. higher interest rate, higher rapayment as well.. by the time you think you can afford that home loan and the interest that it comes with.. you ll realise it ll be more practical in the long run to just save up a little bit more and just build your own house instead..
If only the interest rate is 2%in the Philippines I will build many rental property for business or a house. But Big interest rate is the biggest factor why Filipinos don't make loans to the banks... Another thing if you loan your property and you fail to pay the amortization even for 3 mos the bank will make a way to foreclose your property especially if you have a prime lot. That's why the Filipinos are afraid to make loans.
I'm not sure if this is a factor but atleast the Filipinos that i have observed usually take on debt through unofficial means. Borrowing from their neighbors with no formal contract and only uses their word.
It's more because Filipinos tend to lend money from their friends or relatives instead of banks. And generally, we are scared of debts especially if we know that there is interest.
You overlooked at something really important. Culture... Here in the Ph, family is important, and we don't mind sharing under one roof. Family help each other... I had a debt once, My salary is insufficient to pay them, my mother and my sister helped me get out of it.. they didn't lend me money, they gave me the last money I needed. We all live together. And I will help them same as they would help me.
ito lang napansin ko sa bansa natin vs sa wester country regarding housing loan, dadaan ka sa butas ng karamon bago ka ma approved ng isang bahay sa pinas, ang bangko at ang pag ibig ay hindi bastax2 nag papa utang ng home loan, kaya nakabuti rin ito sa economy at hindi tyo magagaya sa real estate bubble na nangyayari sa USA at yung nangyari rin sa CHINA.... pros nito hindi ganun kabilis ang price increase ng mga interest sa homeloan sa pinas, cons hindi lahat kaya maka afford ng bahay dahil sa hirap ng process and approval rating. pero madidiskarte ang mga pinoy minsan ang binibili nila ay lupa lang muna saka na mag papatayo ng bahay pag meron ng na ipon..
Dumadaan sa butas ng karayom dahil din sa credit rating ng borrower.. tinitignan nila yung stability at capacity bago mag pahiram.. but as you may know. Maraming kinoconsider bago ka ma approve ng bank.. nasa top of the list ay yung house hold income.. at gaya ng sabi sa video,, mataas yung price ng property and yung income mababa.. so yung ratio ng income to price property is mataas.. kahit ako yung lender.. hindi ako mag papa utang basta basta kahit middle income earner kapa.. and hindi lang natatapos sa income yun. Tinitignan din yung life style mo.. yung spending habit.. kung me other debt ka.. kung me sinusuportahan kang kamag anak.. criminal records.. and the list goes on and on..
It’s a Filipino mindset. Having “utang” or debt is frowned upon by society. I have a lot of credit cards and having debt makes me anxious so I always pay them off immediately. I’d rather have zero savings than have debt. Also, a low household debt might also mean we can bear the brunt of the hard economic times better than the rest of our neighbors.
No housing bubbles. Filipinos likes to build their own houses. Also the government has housing programs that will not foreclose after only 2 months of not paying
As a Filipino that born in a poor family but now living as a middle class , I don't like having debts. My siblings have their own house . I got my own property now. The Filipinos dont like putting their money to banks, I remember when a farmer wants to lend us money, they immediately gave us 100k. Despite the government initiative to encourage Filipinos to have their own bank account , some of us still have negative thoughts about banks.
Other countries are rich because they take advantage of banking loans. Having no access to banking products like loans keeps Filipinos in poverty. The country needs a big mindset change to debt!
if you keep your money under mattress, the money will lose its value cuz inflation, better keep at the bank at least you get interest to cover inflation.
@@chrisk7118 I beg to disagree because there are many loans offered by the government. There are also cooperatives that offers loans other than banking loan, which in my experience cooperative loans are far more better than bank loans, because all members of the cooperative ones the cooperative. I know this "cooperative" thing is foreign to western nation because it is somewhat similar to communist system that is in my opinion the western nation is missing out. On the other note. I only borrow money if really really need it, not I will borrow money because there is a new phone coming out. And I really pay off my debt on time. I also think first if I can pay my debt on time and easy... Sometimes I wonder if western nations especially in USA if some of their people actually know what is financial management is because I noticed that Americans tend to have high debts and are struggling to pay it off, I will exclude here the people paying of their education debt because those educational debts are unwarranted and outrageous but hey that's capitalism for you... Some Americans also tend to go for the new phone I noticed, they will buy the latest iPhone in debt regardless if they really need it or not.
Banking institutions in the Philippines are quite behind in terms of policies.. those who don't have bank accounts and are hesitant to have one,.. i understand them.. banks in the Philippines are out of reach, tbh.. there's a lot to complain about ,
Malaysia and Thailand have almost similar household debt to gdp but 58% of our debt is for property purchase as opposed to thais With 38% . Most thAis borrow for personal loans meanwhile Malaysians borrow for house and car loans
its part of our culture to make sure our children wont have to worry about debt.. it is also part of our culture that lending/borrowing through relatives is a thing most Filipinoes rely on rather than financial institution. which is not considered in this video. because borrowing through financial institution sounds risky rather than borrowing through a relative
Because of the greedy corporations majority of us are low income earners that don’t qualify for a loan. 2. Even if you secured a loan, the bank would only lend you around 20% of your annual salary. Because of economic instability the loan falls under high risk hence the astronomical high credit rate would be slapped on your loan 3. Our economy is supported by OFW remittances. Dollar to peso exchange rate has huge impact too as OFWs would use cash to build their dream house☺️ And more other reasons…
Job underemployment in the country, as well as plausible job offerings abroad really explains why people do not risk the loan. It simply is unsustainable if you cant get a well paid profession or job of your choice.
One factor to consider too is the cheaper and perhaps one of the most accessible commuter's system. People would rather ride bus and/or jeepneys for two hours or so almost every day from their home province to cities when going to work or school. So why buy expensive house in cities when you can still use a room in your ancestral house in the province.
95% of my debt is in my housing loan payable in 26 years. Other 5% hoes to tuition and company loans payable in 2 years. Im managing my earnings properly , i always make sure that 10% of my salary goes to paying my debt and the rest for daily needs and savings.
Or I can tell you that we Filipinos dont like debts. You have to understand our culture and not only analyze the data out there. Credit or indebtedness is something we always struggle to avoid. There is a simple explanation.
Filipinos when they get married, they don't buy a house righ away. they could rent or stay with their parents till they have enough cash to buy a propperty and build their house themseles. we also got a habit of building a common room first then add another room as years progres
I am a stay at home mother of 3, I have 2 daughters in college and 1 in senior highschool. we have 0 debt because we only spend what we need and we live within our means.
I hate the housing bubble in the Philippines! This bubble leans more toward ex-pats and OFWs that are native to Metro Manila. Even my client who is a successful boomer businessman said the same thing when I asked him about it. lol But what I hate the most is that this bubble is destructive and not helpful bdw. A lot of land area is being developed esp farmlands converted to condo o housing. smh Also, I find it funny that the people buying these properties tend to use them for AirBnB/rentable.
Partly true but the thing is,, yeah units, condos are occupied.. but by who?? Most are owned, occupied by foreigners.. on a. Business perspective, theres no bubble,sure.. but if you stick on the definition of property bubble, with regards to the Filipino consumer.. there's a bubble as most cant afford to have their own home..
Only a few people really take out house mortgages and housing loans here since other than the very strict bank requirements and very prickly interest rates of lending agencies, rent is relatively affordable and housing plans like condominiums and let's say camella homes, the monthly installment costs around $450 sometimes without any downpayment. Also the current millenial population (28-46ish) normally only had 2-3 siblings only, at least one of them would stay in the common house and at least another sibling would be overseas so there's less pressure to own a house
as a filipino i do see that very few people/households in here have very few bank, financial institution loans, lending companies here have a hard time finding borrowers that they would literally forgo background checks and would give you loans by just showing them 1 government ID. I remember when I was still a college student earning very little through my online shop, (around 250 usd per month) many credit card and lending companies would give me 2% loans with spending limit of about 10x my income each without even asking for my banking statement. I currently have 2 of those right now and they have been a huge help.
Housing cost in the Philippines is ridiculously high and increases per quarter year after year which is crazy and the bank is so freaking slow and strict in lending money.
You actually failed to mention this.... in the Philippines, those who have less, actually own some property (for free). Those who can afford, are actually the ones who have bought some properties via mortgage. People in the Philippines, who can't afford to buy their own property, do squat on gov't owned properties. When the gov't is about to use them, they get relocated, and they got to own that property. Simple way to own a property and avoiding mortgage to be honest. 😅
I'm Filipino, I don't have housing debt. I bought a lot for 200k in 2008, got married 2020, and then put up an unfinished small house for 300k. It still needs finishing but it's way better than renting, or by a house from a developer.
Most Philippine houses are built in phases depending on the money on hand. Like modular like house. This means there is minimal need to borrow large amount of money to build a house. Thus lowering the household debt. Filipinos also are afraid of monetary debt but ate so happy to have other type of debt
i used to pawn my jewelries but since i fear sinking onto interest rates, the very day i got the full amount to pay my loan, i just go and pay it even if i just took the loan 2 or 3 days ago.
It's so hard to apply for loans, even credit cards, here in the PH. That explains it. And only a few among us resort to loan sharks because we are aware of the implications.
A lot of the houses or properties owned in the Philippines are still named under their parents/grandparents and sometimes under great grandparents. In the province, the heirs just don’t bother to document the transfer of ownership and when they sell their property, it’s at low market value and undocumented.
The last financial crises taught filipinos to live within their means.. and usually when in need, they would go to family for loans without interest usually.. sometimes without even meaning to repay it back
salary per month worker 1: 5k - 10k worker 2: 10k-25k worker 3: 25k- 75k worker 4: 75k- so on if ur worker 1 and 2 banks dont just lend money for you to own a house. 30% of your salary is the highest you can loan. worker 3, can use their goverment benefits called pag ibig fund but a lots of processing.. worker 4, they can buy a house no need to be in debt. filipinos not afraid of dept, its just that the bank dont let you to have a debt that big.
In Philippines , even the childrens have own family.the still live in there parents. To escape mortgage fee. And also many filipnos borrows money to the money lenders person who don’t have license of SEC..
@jana catudan It's changing now a bit in modern times, at least in the cities. Most young people like to go independent now when they get jobs. But I agree that the "living together custom" is still the case in most provinces.
Low debt because I've never seen a credit rating service there. Lots of informal debt, pawn shops where phones are left as collateral, 5/6 loans from individuals, borrow 5 pesos pay back 6 pesos 30 days later, land pawned for seed or fertilizer with the loaner using the land until the farmer can pay off the loan if the loan goes into default. And per GDP, hell their incomes are so low, $200 a month is only a dream for many of them.
My grandma told me that if you have a roof above your head, has a job, you're not poor. If you have a big house, a good job, but has debt, then you're poor. 😅
Most of the Filipinos started with only what they can afford, and they will start from there. Together with the family they will create. It's not uncommon to see newly married couple starts with a nipa hut as their first home, and together, the couple will build a larger home over the years. We avoided debt as much as possible unless it's an emergency situations. And sometimes, even if its an urgent circumstances, we're still avoiding debt, because we only sells our valuable possessions that we have to finance the urgent needs.
This video on expensive housing market is ONLY APPLICABLE to the two biggest metro cities in the entire Philippines(Metro Manila and Metro Cebu) where all the big businesses and mega corporations crowd to, however, everywhere else land value is very very affordable, I'm even quite amused that big developers are building condominium towers in my city where land is cheap and the only people who actually buy a condo in my city are those wealthier people who already own more than 3 properties who want a condo beside a mall or from Metro Manila or Metro Cebu. I own a construction business focusing mainly on houses, and you might be surprised that A LOT of Filipinos are paying CASH or are paying for their properties at an installment in-house directly with private land or housing developers, I myself have acquired 3 different properties paid or is being paid with cash in my late 20s. Aside from that, Filipinos RARELY sell their family properties, they get handed down generation after generation, so Filipinos have that security that they have somewhere to live until they can save up enough money to buy their own lot and build a house on it. When an entire family gets down on their luck, at least they have a home and don't go living in the streets. On housing loans, Banks and government housing fund agencies give out loan to Filipinos at a very competitive interest rate for up to 30 years to pay, which over 30 years become very small that people pay off their 30 year plan in 15-20 years, but securing a loan requires a lot of requirements especially the proof of income to assess that loanee's ability to pay back the loan, and will give out only a maximum of usually only up to 30% of the household's income. CARS on the other hand have become more expensive, but doesn't stop Filipinos from buying the latest model. Credit card debt is also seen by Filipinos in a negative light, it may be convenient and easy, but for Filipinos it's "still debt", while other countries like the U.S. revolve around credit, Filipinos would rather pay cash or debit directly deducted from their bank account, and banks DON'T LOOK AT CREDIT HERE, they look at properties, assets, savings accounts, payslips, etc.; For a Filipino, if you can pay it now then just pay cash why add more steps to pay? And if you don't have the money then wait until you have money. I went down this rabbit hole and had dug myself into a very deeeeeep credit card debt, and no way am I gonna go back to that. LASTLY, there are no student loans in the Philippines, but we have more affordable colleges and universities that even people below the poverty line can send their children to college through each college's scholarship programs for children of lower household income that offer free tuition for either keeping a grade average or by being a working student. Aside from that, a lot of Filipinos are paying for educational plans for their children's college education from the moment their child is born. There are also these new small loans business that tie in with retail stores that give out installment plans on appliances, phones, computers, etc.; that only asks for a proof of income, a government ID, and personal references.
My guess is that it is a combination of things. 1. Relying on remittances and overseas workers, much of the household debt is held by workers outside of the country and wouldn't show up on the balance sheets. 2. The banking industry, most people don't have bank accounts 3. Lack of financial education 4. The Catholic cultural of the Philippines, that is it's God's will, what happens will happen you can't do anything about it, therefore don't plan 5. Filipino time that is showing up late is okay, not having the money on time for the loan payment that is okay, it is normal. 6. The Philippines once was a leader among Asian economies, then for decades and decades it stagnated, why do you think there was nostalgia in the election of Marco's for office, so you don't borrow and spend if thing are always getting worse in your mind.
Filipino parents/guardians/relatives mostly finance the education of their children. Student loans are unheard of or rare in the Philippines. Not sure if it’s the same for other Asian countries for comparative purposes . Also, from my own experience, as an Overseas Filipino Worker (OFW) for more than 18 years, I have/had short term personal loans in the foreign country I work in which is basically out of scope of the PH household debt. These loans were used to support education cost of family/relatives, for investments in real estate or businesses in the Philippines. This could be true for the majority of the OFWs out there who were/are able to buy their own homes and real estate investments and finance their businesses from personal foreign loans. If I may also add, securing a loan is very easy here in the country I work in (just present a salary certificate, bank statements and letter from the employer) compared to getting a loan approved in the Philippines which could be very difficult with higher interest rates.
we have been a "developing country" for so long, are we really even developing? more like stuck. Too much shake up happened in the last few years. There were efforts to repay national debt, which probably worked. But prices of everything went higher. We still borrowed big money, plus other bad global events. So nothing gained for the individual. I hope it goes better in the following years.
Not enough creative entrepreneurs here in the Philippines. In other Southeast Asian countries it is more prestigious to start your own business than be employed. In the Philippines if you are employed in a big firm, that is what we call "jackpot". Also as Bob Hope would say, "Banks will lend money if you don't need it." Philippines is very conservative in lending. What is not documented is "5-6" informal sector as pointed out by LA somewhere in the buttom. The informal lending sector does not require any IDs, what they require is that you have a small time business (like a kiosk) and you are always present. I believe the informal lending sector is around 10%-20% a month. What is getting popular now is lenders make arrangement with the comptrollers to have their salary deducted and the deductions go straight to the lender.
Household debts is okay if you have high gdp per capita. It means ppl buy a house because they can afford it. Property is not cheap and most ppl need loan to purchase. And these property financing will take about 20-25 years duration. Ppl can sell their properties for profit after 5-10 years and the profit alone will cover the interest rates. Must be smart
My rule of thumb... If I cannot pay a housing loan for 5-7 years then I will not make a housing loan because only the banks benefits in these transaction.
@@namazlur78 I'm a busineman and that's how I do things. Even my car loan I don't want extended terms like 4-6 years because the banks make more money from me. 2-3years max on my car loan. Anyway most Filipinos cannot avail house loans since most cannot qualify so instead they save money and build small house and if their income increased then that's the time they will avail a house loan.
I have a high income, more than the average filipino, the tax I pay monthly is as high as 2 full time employees. But it was very hard for me to get a personal loan, and mortgage, it took me 2 months just to get approved on top of a lot of documents. Just immigrated to the US we only need SSN and any paper (no need to be official or certified true copy) showing monthly income that's it approved on the spot without the need for a collateral. In my applecation in a Phiippine bank with the same amount and the same income after passing so many documents and collateral still denied what the hell. It's a 100x harder to get a loan in Philippines and they give you very high APR or interest. Debt if used right is a good tool for financial growth
Thanks God I'm probably one of those lucky creatures back home having inheritance properties were gratefully thankful living in inter island provinces that properties are vast & the cost of living is low & the food was completely organic this probably talking about real estate in bigger cities in the Philippines,though living in nearby islands isn't that really difficult in the Philippines
I'm actually happy the Philippines doesn't have that much debt. Because unlike massive powerful countries. We're a small corrupt economy that can barely pay off what debts we already have. If we did take on millions of dollars in loans to improve our country. Half of it will go straight to politician's pockets.
If there's one thing that I can thank Pres. Ferdinand Marcos Sr. (I'm not praising nor condemning him, since he did both good and bad things, he's a complicated figure) Is that the debt and the millions of pesos he "allegedly" "stole" during martial law, was small compared to our other south east asian counterparts like Indonesia during the Sukarno Administration which Sukarno stole more money domestically than Marcos.
Ang importante nakakabili tayo ng mga basic goods…send are children to school…recovery lang ang utang debt cycle the government needs to make more aggressive move to stimulate the economy print more money and barrow ang inflation ay progressive pag may demand tumataas…consumer market na
because filipinos majority will incur debt if it is really necessary, like building house but majority build their own homes, filipinos are not really into luxury items such as expensive clothes,bags and cars. most of the time filipino incur debt when some one from the family get sick because it is expensive, but majority will try its best to paid all debts as soon as could
Informal cat advances and loan sharing aren't really counted. The problem is the informal economy is poorly monitored and understood. In smaller businesses, workers can sometimes be a few paychecks advanced and in debt, paying it off slowly or simply defaulting when they move jobs. Then there is the infamous 5:6 (20% interest) loan shark system, although it is not as common nowadays.
Loan sharks and asking for loans from your relatives are very common here, hence no recording/reporting to the government of some sort. For sure, the 10% value is highly underestimated.
Sounds wrong. I've worked here for over twenty years. Most people are in debt but it's in revolving debt to social security and the housing authority which give out personal loans to be paid over a 2 year period. They also borrow from loan sharks and payday lending companies. These abound in the business parks I've worked in and people give their ATM cards as collateral. Young professionals who are able to procure credit cards also rack up quite a bit of debt from conspicuous consumption. The only reason people don't do more is because a lot of Filipinos are unbanked. That puts the formal banking sector out of reach for most of them so they get salary loans from employers, 5-6 lenders and such.
Difficult to get loans here because of stringent requirements. Banks know that an ordinary salaried worker will never have the capacity to repay the loan. The cost of housing is too expensive compared to the average salary. Real estate (apartments, condos, lots) in Metro Manila are more expensive than those you'd find in other cities in US and Europe.
Filipinos of the middle and working class build their own homes which rely heavily on their budget. They prefer building their own rather than relying on bank loans.
I am disappointed that you didn't dive deeper into the Debt Crisis of the 1980's. Crippling foreign debt, low foreign exchange reserves and high inflation severely hit incomes. How could one even borrow when you had no job? I recall being a teenager during that time and I have grown distrust full of debt. Perhaps you should looked further back then.
One of the reason why Philippines has a low household debts, because if they have piece land, they preferred to build their own house by using their own money, to avoid paying in interest rates, for example, if you can buy 300k pesos a piece of land in 250sqm, and build ur own house amounting to 1.2million house. Instead of buying a house in subdivision that amounting to 3.5million pesos or even 4million pesos payable in 25 years. Therefore Filipinos are more wiser in their finances.
🤔 *possible houses are not affordable to many Filipinos but some richer family owned more than one houses/condos/properties... some housing maybe bought or on lease of foreigners... many families use to lease than to own a property because of certain reasons - like houses are not affordable and/or hoping that their children will provide the dream house in the future...*
Two things that you missed in this video. 1. It's incredibly hard to get a loan from a bank here ever since the asian financial crisis. Banks here are now extremely cautious. 2. Informal lending. Many Filipinos borrow money from illegal money lenders who charge very high interest rates because they can't get loans from banks. If you include this, household debt would be significantly higher.
Household debt is a huge indicator when comparing one's economy. Why do you think the Philippines has a low household debt? Let us know your thoughts down below!
Those are are poor cant afford a house. There are 20 million Filipinos living in abject poverty, living on $1,42 a day. And there are 4.5 million homeless in the Philippines. So the debts relating to home mortgages are low. 80% of Singaporeans live in affordable public housing and 90% own their own homes. The repayment of the loan instalments are service mainly from the Central Provident Fund, a form of national savings. So there is less chance of problems like default,. A home is an investment an asset not expenditure. Only those who borrow for spending like using credit card borrowings for unbridled consumption, on entertainment, travels, buying luxury goods etc are at risks of financial difficulties.
Debts are also and indicator of credit standing, Those who have no money have no debts because no one will lend them any, Thats why most of the rich are the ones who have debts, It is not debts that is a problem per se, but how it is managed and the capacity, capabilities of repayment that matters, For those with mortaga homes it is good as property prices tend to increase over time, Many Singaporeans profited from this, from capital appreciation. This, provide one overstretched oneself financially. And if worse come to worse, a house can be sold and the proceeds will generally be more than the debt, in part because of the minimum deposit on purchase, Besides improving the income of Filipinos, the government should build public housing for its people. Now many people like live in squalor whilst luxurious "citiies" are only build only for the rich,
@@jsanon1634 You are very wrong. Most Filipinos live in rural areas, and when they build houses, they prefer to pay in cash or build slowly so that their income can support it rather than borrow or have loans. I myself am an example. I'm an overseas Filipino working abroad and I have three houses back in the Philippines. Two of them are those I built from my own money, while the other one is from my loan . The Filipino people's mindset is " better to live in a simple way than to live and act like a rich person because of the debts."This days In the Philippines, you can see a lot of rich or middle-class people. We do have many homeless before but now in the Philippines the government have lots of new projects like the Tondominiums. for the homeless and For the people that live in slum areas in Tondo, they now have free houses given to them by the national government and the local government of Manila. Those who live in slums in the cities have homes in the provinces too so those who wanted to go back home and start new life the government are encouraging them to go home in their provinces.
@@katribo1185 Most Filipinos live in rural areas u said. U are wrong. Most Filipinos want to work and live in urbanized areas. Metro Manila with only a land area of 620km2 a population of over 13 million people or more than 12% of the entire population of the Philippines
According to the PSA, in 2020, 58.93 million or 54.0 percent of the total 109.03 million population of the Philippines lived in URBAN barangays Article: Urban Population in the Philippines (Results of the 2020 Census of Population and Housing) PSA
Also cities in the Philippines generate more than 70 percent of the national GDP with Metro Manila dominating MORE THAN HALF of it. The seven largest cities host 54 percent of formal jobs in the country. Article: Filipinos living in urban areas to double to 102M by 2050 WB
The urban population will continue to grow Article: Filipinos living in urban areas to double to 102M by 2050 WB
@@katribo1185 The mindset u mentioned is nothing unusual and is typical of the elderly older folks esp retirees in like every country. But people, especially the young want to work in the cities and live there, not in some rural remote areas like farms. This can be seen by the number of people who migrate to the cities like Manila. Problem is many are poor cant afford to buy a house and end up living in slums or squalid housing. There is little or no choice as there is scarcity of cheap affordable public housing available.
Tondominiums, Binondominiums and Basecommunity are just small limited developments. They only offer only a few hundred flats or houses for only like over a thousand people in apartments build over two years. Just take ONE slum like Tondo which have over est 600,000 people. At such a rate of development, it will take like more than 100 years to provide housing just for them!! lol. According to PSA there are 20 million poor people and 4.5 million homeless people in the Philippines.
There are a lot of reason for this:
1. Culture - we have no problem living with our parents even if we're married so getting a mortgage is not a priority
2. 10 million Overseas Filipino Workers - with $30 billion dollars in remittances every year no need to take on debt
3. Loans approved are mainly based on capacity to pay. Most public and private lending agencies only allows a loan with amortization not exceeding 20% of gross income.
very true
@jana catudan Motrgage is a legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.
May I know how much is the typical annual interest rate and compounding frequency like an interest rate of “18% per year compounded monthly” ? thank you
I learned a lot from your analysis.. kuya..
@@darkmatter515 He was sarcastic.
I didn't see anyone in the comment yet mention the loan shark debt or what is colloquially called in the Philippines as "5-6". Basically, it's an unregulated system where loaners (usually foreigners like Indians and Chinese) approach or make themselves available to the populace and provide them with easy loans with high interest rates. You see them go around in motorcycles the whole day collecting payment from mostly poor to middle income individuals and small businesses.
The system has been around for so long and sometimes it is the only way Filipinos can get cash to do something, and it's sad that more legitimate entities never stepped in to fill the void to help grow the middle-class.
5'6 is illegal and you can literally refuse to pay without legal problems, although I wouldn't say the same about them harassing you and endangering your life.
There are more and more Financial instruments now that are popping up where people can take out loans of finance whatever venture they want. Just those apps Gcash, and PayMaya that were mentioned, these apps now have a credit systems that people can use to pay bills, it's probably not as sophisticated as first world countries, but it's already a great help for the working class.
Hindi po sila foreigners. Pinoy po ang mga yun. Although may mga foreigners sa iba sa kanila, karamihan po ay pinoy na po.
@@shawnallanwebb3502 mga online banks din like CIMB PH
In malaysia, we got those ah longs instead. Despicable pricks.
I'm one of those filipinos who has 0 debt. I guess it's my parent's upbringing that i absolutely avoid having a debt as much as possible. I think the key is responsible spending depending to your income. Phones, house, vehicles etc are all paid in full everytime of purchase. I'm currently 33 yrs old and if i hit my targets i would be financially free at 38-40 yrs old.
Agree. I won’t be buying something over my salary and will only be paid by credit card. No, I’ll better wait till I can buy it fully. I don’t like the idea of paying monthly mortgage or fees.
Yodepuga, sanaol meg ba. But that's really true, it's parental upbringing. I'm 26 years old I've incurred a sizeable amount of debt because my mom pressures me into things like helping my dad or her out. It's kinda sad actually, but I believe that I have a responsibility to them, utang ng loob and all, but I also seem to see how they've poorly managed their finances and how it affects us as their children.
@@agnusdeiquitollispecatamundi most filipinos don't have enough knowledge to manage their finances. Even i started late and still learning, schools or parents also doesn't teach us about that. Maybe the disgust on being an employee what drives me to learn how to manage and earn money properly. And i promise you all it is extremely hard than being an employee but it brings more fulfillment for me. I've experienced to be broke multiple times already but i juts get up and keep being positive, learn and work harder everytime
Same with me for not having debt with the help of parental upbringing, but with a twist: With the amount of work we had to do to help out in paying my parent's debts in the past, we swore to never go through that again, lol.
@@agnusdeiquitollispecatamundi No offense dude pero nagpapauto ka lang sa parents/family mo. Even sa school, turo samin dati is unahin muna sarili. As parents, obligation nila na bigyan kayo ng mga kapatid mo ng magandang buhay. Not a mediocre life. Wala kayong utang sa parents nyo. Sila tong nagpakasarap habang ginagawa kayo. Hindi nyo pinilit na gawin kayo, ginusto nila na gawin kayo. Kaya kahit piso, walang utang ang kahit sinong anak sa parents nila. Kung hindi kayo nabigyan ng magandang buhay ng parents nyo, sila ang may utang sa inyo. Mga PI na magulang yan, gagawa anak, hindi naman pala kaya bigyan ng magandang buhay anak nila. Tsk. 🤬
The reason why housing is very expensive in the philippines(and why less filipinos loan a house) is because major housing/condo developers market them to foreigners and ofws. If you go to BGC, many condo owners are chinese, americans and other foreigners.
With the very expensive housing, not even middle class can afford a decent house unless both husband and wife are working fulltime which is just sad.
A husband and wife working fulltime is how the modern world works. Then again the philippines isnt modern and is a third world country. Very cash based economy as well ehich is very primitive. Here in developed nations(im in canada) no one carries cash around unless you are a stripper or a drug dealer lol. Most people just carry. A five dollar bill or something just in case but usually we just dont even carry cards even cause we can pay with our smartphones like apple pay. Our credit cards are installed on it so you just gotta tap your phone anywhere. Literally anywhere, food trucks and even people with usb on their phones if their a mobile(likes to roam a lot like a food truck) merchant of some sort
@@foodfam7651 oh its getting there were currently taking advantage of Emoney now. atleast from were i am(iloilo)
@@foodfam7651 e-wallets are actually pretty common now in phillipines, u still need to have a bit of money on hand in case you need it but almost everything can be paid through mobile phones here. It is sad that depending on ur work, modern world forces both husband and wife to work tho. Unlike the old days where one of you can work and be more than enough so one can focus taking care of their children, now both are forced to have less time with their children just so they can have a comfortable living even if that "living" is mostly spent on work than ur own family.
@@foodfam7651 nahiya naman ang Japan sayo. the third biggest economy in the world is still predominantly a cash driven society.
@@foodfam7651 Actually in payment methods PH are far ahead of Canada - everyone already has an e-wallet like Gcash or Maya and pays with the phone app, they skipped the plastic card step where CA is still stuck.
And yes you can even pay stippers and drug dealers with phone app like Gcash.
Filipinos are scared of debt. Yes, housing price is expensive if you buy from Developers but most Filipinos build their own house and they build their house based on whatever budget we have. As long as we have a simple home we called our own we are happy and contented.
Avoid using credit cards and payday loans that rip you off at over %20 percent interest.
Save for what you need to buy.
Save for a house over the span of years and take the biggest down payment that you can possibly afford with the lowest interest possible before agreeing to any mortgage.
Don't make the same mistakes that destroyed many MANY households here in the United States.
@@coffeeisthepathtovictory1290 just search what mortgage is, ah yes most of the people here doesn't like the idea of someone having possibility take the title of what you made, but I thank you for the warning.
Yes they are happy living under the bridge and shit next to their bed.
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it's both a good thing and a bad thing.
It's good because we don't have that much household debt but it's also bad because if we keep getting swayed by that irrational fear, the country will never develop and gain a better footing than our neighbors.
One such example of this fear being a hindrance is when Duterte pushed the Build Build Build program where many liberals and especially the media have used scare tactics to make our total debt seem like a scary monster when in reality it's not and is a good indicator that money was being well spent and will make our economy better overall especially in the long run.
This is also why Pnoy was scared of getting loans because he was afraid of debt and was scared of dumb pinoys insulting him for it.
There seems to be a strong aversion to debt in the country. Debt is usually treated as the last resort, thus we get the stats where "70% of people taking debt are struggling" because most likely they were already struggling in the first place. There is a stigma that only gamblers, addicts and people in dire need for medical payments are the only people that take on debt.
Taking in debt for a future investment is not a common concept within the country.
i think the local banks in the Philippines have very stringent rules in approving housing loans making it difficult for common people to avail for loans
The thing here is that paying loans is gonna be another problem for most poor households.
Most Filipinos borrow money outside banks and amongst themselves. They don’t pay interest, penalties and often do not pay at all.
I agree with this. My mom handles our finances and when i asked her how she was able to fund the construction of our new house, she said that having ~20% of the structure (or was it the foundation? Can't recall the details but it's still pretty significant in praxis) already laid out was a prerequisite before she was issued a loan. That was at least 13 years ago too, so the policies must have changed by then.
True...
@@ehm2943 5,6...
I own several credit cards and I always pay my dues on time. The Filipinos mindset towards personal debt is very different compared to others. I financed my own business and house purchase with my own savings. My relatives also helped out. This may sound arrogant but ordinary Filipinos do care about their honor and family name. Having a huge debt is fine as long as you can pay for it. Filipinos tend to take things slowly. We value our peace of mind more than money. May be, that's the reason why we are happier? Who knows?
I think you are on point.
Correct observation, that's right
I don't see any arrogance, i see determination and willpower
Who the hell wants debt?
@@dr.doctor4878 america.
"finance management is not properly taught across the population"
quite true. it's not that we're oblivious about it, but most of us are just too thick. I too live in a village and most of my acquaintances here have debt problems and yet, they still smoke and drink, worse, they owe those cigs and liquors to the sari-sari stores. it also affects sari-sari store owners because of these deadbeats.
LoL! I believe this video talks about institutional debts (thru banks and other financial institutions) and not informal debts to friends and neighboring sari-sari stores but you are right, there are many thick-skinned neighbors who make utang and don't pay up. I used to run a sari-sari store myself.
Parents rather nag you on how hard to earn money, which could scare kids from learning finance from parent, rather than teaching proper use of resources.
If I may add, Filipinos, like myself are scared of debt. I will loan but I am so obsessed in paying it off.. I guess a lot of Filipinos have the mentality of not making your debt unpaid cos we value our image or character...
If my mom didn't offer me to lend me money to buy a house I wouldn't have owned one..
I guess we also need to up our financial literacy so that we can be more open to debt that can actually be a good investment in the future...
All rich people and countries use debt to get ahead. It is a useful tool.
*we have a free financial literacy program via zoom app. Check it out. Send me a message....* 😊
*f u want lots of money, then go into bussiness or investment..... Bcoz no one get rich f u r only a employee.*
Tell that to my co-workers. Hahhaa. Kidding aside, most of the banks here will only approve loans to select people who they think can pay. They have stringent processes.
Sana all makabayad eh .. may iba jan.. ahahahahaha.hihiram tapos di na babayaran.. kong pababayarin na sila..kaw pa masama... That's the negative side of Filipinos who loan or borrow money😆😆 no shame of Paying back and they make you look bad
To add from what others have already shared here, I have observed that debt/loan is somehow related with reputation. I have observed that when a Filipino builds or buys a house through debt, others are quick to discredit the effort as "cheap," and the person as "pala utang" or a debtor. I found that Filipinos detest being called. They are also weary of owing their co-Filipinos an "utang ng loob" or debt of gratitude.
Also, to build your house here by your own efforts adds to one's reputation. Others will be quick to identify you as a hard worker, successful, and blessed.
To build a house for your parents is, perhaps, the epitome of Filipino pride.
Most Fiipinos are okay with shared living. We can live with our in-laws, with little to no issue. We can mostly adapt. That aside, we can live on small houses within a compound. It's not uncommon to see a 400 sqm lot with 3 to 4 families living on it, mostly relatives, on small houses sharing a garage, lawn, and sometimes the kitchen.
Thank you for covering this topic. There's a lot of reasons why Philippines have a lower household debt compared to other countries, like the current bank policies and the culture. Banks thoroughly screens the loan applicants, to assure that it will be paid on time. In terms of culture, a lot of filipinos don't like to have debts, due to the lack of knowledge on financial literacy and the mindset that borrowing money is a very risky transaction that should be avoided at all cost.
If the government prioritizes on educating our citizens on financial literacy, proper taxation, assist on establishing local businesses, and eradicate the corruption in our government (to properly execute the projects that will greatly benefit the citizens) we can significantly improve the lives of filipinos and the whole economy.
that type of education should be the responsibility of schools whether public or private.
Even if they invest in Education, it would be shhhtttt if the ones teaching them are communists who also have the same dumbb mindset of "mUh dEbT bAd!".
Being scared of debt is likely caused by loan sharks in the past, and I'm not talking about the typical ones in the cities.
I live in the rural areas of the country. Since the old days, people here have been scared of debt because of the "sumpa" or "barang" cast upon them if they fail to pay up. Even nowadays, people are still scared pf these curses.
Filipino here, as for my perspective I don't have anything against debt since there's good debt, however I'm quite conservative with money and I'm also scared of debt. So as of now, my only debt is my phone which I pay by installment for a year but I only have to 2 payments left after that I can already breath because I'll be debt free by that time. Lol! As for my university, we don't have student loan here so I labored thru scholarships and part time jobs. I graduated debt free. For now, I'm saving aggressively b'coz I wanna have my own house, and I wanna use my savings and if I have to take out a loan for that, it will be lesser because I'm scared of the interest, I'm scared I might not be able to pay it off.
I like your comment. Good luck.
I gotta say people don't normally go to debt for phones in other countries.
@@xygog2408 yeah, so you can see the difference of debt here in the Philippines and other countries. I consider my phone as debt since I haven't paid it off yet, it's a liability for me where as that's not how you see it in other countries.
@@justgoabby what he possibly meant is why spend much for phones.
For me, its a necessity and spreading it over a period of time is manageable in my finances.
@@paulvicentevcurimao5596 oh is that what he means? Why I'm spending much on phone, ?well,, coz, it's I like to have nice phone and I can pay for it but in my personal persperctive with finance, I still consider it debt until I pay it all off.
My parents started with a hut, then they slowly built from there. Now my father is retired and used his retirement money to build us his children houses. The total debt I have right now is around 3,410.71 USD.
Filipino culture sees debt as a very bad thing, whether it's personal or even government debt. Another thing is that most Filipinos don't have or are not qualified to have credit cards. Banks are super strict on who they approve to get credit cards. If you do get one, you start off with a very low credit limit.
The expensive housing mentioned are those that you buy from developers most filipinos prefer to build their own houses, hiring the workers and buying the materials themselves, this can result in total housing prices being somewhere between 1/3-1/2 of a comparable house bought from developers.
I love how this channel is in a form of education.support
The video failed to factor in the high interest rate of loans in thePhilippines. My last car loan was at 12%. Housing loans are also around that. Informal loan sharks charge 5 ~ 20% per month!
Modest housing loans in the Philippines are mostly acquired thru gov't agencies like SSS and GSIS, payable up to 30 years, I believe, hence the possibility of defaulting is much lower. Culturally, the average Filipino takes pride in paying up such debts or living debt-free later in life.
Pag-ibig too.
@@mutya_ Sorry, Pag-ibig na nga pala ngayon pag housing loans. Na-stuck na isip ko sa SSS nung panahon namin, Thanks.
@@s.t.santos5928 SSS is for retirement.
@@Sku11Ski11 Correct. Matanda na kasi ako kaya nasanay na ko na SSS pa din ang housing loan. LoL!
Student Loans mainly does not exist in Philippines either due to Scholarships or Cheap college provincial tuition fees or if they can’t really afford college they would skip it go straight to Blue collar jobs-Delivery drivers, Fast-food staffs, Agriculture, Maintenance, Store clerks, Sari sari store, Ukay ukay sellers, online sellers, Pedicab, jeepney drivers, karendirya, Cleaners, Skilled workers etc. and the most famous job that does not require College degrees--- Tambay and household Maritess
Thats because bulk of the debt in the philippines is informal. Thats why its not reflected in the official statistics. Most of the people i know have debt with loan sharks, friends etc.
True with higher interest rate. And if they cant pay friendships gets broken
"If I can't buy it in cash I won't buy it"
this is the reason why I still use the smartphone I bought 5 years ago.
Buying house in the Philippines is not much of the problem even you are earning the minimum wage. The problem is the location of the house. The houses in provinces are a lot cheaper than houses in Metro Manila, the nearer to the center of economy the higher the price.
As an economist who has also lived in the provinces I am *highly* suspicious of macro data from the Philippines. From what I have seen informal, unreported economic activity far exceeds formal, reported activity. The majority of debt is not reported nor does it involve any formal financial sector institutions.
Good observation coming from someone outside. There's a lot of discrepancies and in fact we don't have a nationwide credit profile
No mention even in the comments thread of informal "5-6" debt. The consequences of not paying such debts can be dire.
A lot, I mean a lot of debt is informal, usually debt to friends, family members, and freelance lenders. The interest rate is "interesting" ranging from 0% up to 20% up, and time limit to pay when you can to due date with couple of days allowance.
@@johnmikezstaca4307 Yes, that is exactly my observation.
The reason it's usually ignored though is because aside from the fact that it's more difficult to track, it doesn't really matter on the industrial level. It may affect individuals, but it doesn't affect the financial institutions. When the financial institutions are affected, that's when we get things like bankruns and collapse of major businesses leading to unemployment.
Utang is not reported. Utang sa relatives. Utang sa mga kaibigan… etc. not counted.
Part of it is also because most don't pay everything by credit card. Most Filipinos pay in cash and you can pay via cash with almost everything there. In the US, its the opposite. Most people rely on credit cards a bit too much and most I find (usually the youth) are less financially responsible. Not only that I notice less establishments accomodate for cash now which can be a good thing and bad thing. In my experience, paying with cash helps you physically see how much you spend in general. I understand why it's not as reliable too but when it comes to learning about money, physical payment helps a ton in visualizing
There’s a saying in the Philippines “ when the blanket is small try to fit in it“ its mean if you don’t have money to spend just be grateful what you have.
Housing loan rates in Singapore is around 2%, how can you take debt in PH when the interest rates goes up to 15%? You will rather save up cash and buy property In cash.
Agree.. their home loan interest ranges around 6 to 8 percent.. thats quite high for a 20 year max to pay mortgage.. shorter period higher rapayment.. higher interest rate, higher rapayment as well.. by the time you think you can afford that home loan and the interest that it comes with.. you ll realise it ll be more practical in the long run to just save up a little bit more and just build your own house instead..
baka naman payable in 30 yrs?
If only the interest rate is 2%in the Philippines I will build many rental property for business or a house. But Big interest rate is the biggest factor why Filipinos don't make loans to the banks... Another thing if you loan your property and you fail to pay the amortization even for 3 mos the bank will make a way to foreclose your property especially if you have a prime lot. That's why the Filipinos are afraid to make loans.
@@applemansanas3246 20 years lang max as far as i know.. high interest, shorter year term of payment, means higher mortgage rapayment..
@@VS-np3yq ahhhh. i see i see. pero usually dba mas mabilis mo mabayarna mas mababa interest
I'm not sure if this is a factor but atleast the Filipinos that i have observed usually take on debt through unofficial means. Borrowing from their neighbors with no formal contract and only uses their word.
@jana catudan Yes, so informal lending might be a factor on why house hold debts are low because such practices are not recorded.
It's more because Filipinos tend to lend money from their friends or relatives instead of banks. And generally, we are scared of debts especially if we know that there is interest.
I believe housing loans and credit cards aren't as available to lower income households compared to other countries.
You overlooked at something really important.
Culture...
Here in the Ph, family is important, and we don't mind sharing under one roof.
Family help each other...
I had a debt once, My salary is insufficient to pay them, my mother and my sister helped me get out of it.. they didn't lend me money, they gave me the last money I needed.
We all live together.
And I will help them same as they would help me.
❤
ito lang napansin ko sa bansa natin vs sa wester country regarding housing loan, dadaan ka sa butas ng karamon bago ka ma approved ng isang bahay sa pinas, ang bangko at ang pag ibig ay hindi bastax2 nag papa utang ng home loan, kaya nakabuti rin ito sa economy at hindi tyo magagaya sa real estate bubble na nangyayari sa USA at yung nangyari rin sa CHINA.... pros nito hindi ganun kabilis ang price increase ng mga interest sa homeloan sa pinas, cons hindi lahat kaya maka afford ng bahay dahil sa hirap ng process and approval rating. pero madidiskarte ang mga pinoy minsan ang binibili nila ay lupa lang muna saka na mag papatayo ng bahay pag meron ng na ipon..
Dumadaan sa butas ng karayom dahil din sa credit rating ng borrower.. tinitignan nila yung stability at capacity bago mag pahiram.. but as you may know. Maraming kinoconsider bago ka ma approve ng bank.. nasa top of the list ay yung house hold income.. at gaya ng sabi sa video,, mataas yung price ng property and yung income mababa.. so yung ratio ng income to price property is mataas.. kahit ako yung lender.. hindi ako mag papa utang basta basta kahit middle income earner kapa.. and hindi lang natatapos sa income yun. Tinitignan din yung life style mo.. yung spending habit.. kung me other debt ka.. kung me sinusuportahan kang kamag anak.. criminal records.. and the list goes on and on..
In the Philippines house mortgages is not very popular because most Filipinos build their own houses.
true but also mortgage rates in the Philippines are super high. Banks in the PHilippines are exceptionally greedy. specially BDO, fees left and right.
@@noeminoemi1350 nationalize the banks
Well for our family, our grandma and grandpa have their own land . Our government doesn't claim lands.
government will take the land if the property tax was not paid.
It’s a Filipino mindset. Having “utang” or debt is frowned upon by society. I have a lot of credit cards and having debt makes me anxious so I always pay them off immediately. I’d rather have zero savings than have debt.
Also, a low household debt might also mean we can bear the brunt of the hard economic times better than the rest of our neighbors.
No housing bubbles. Filipinos likes to build their own houses. Also the government has housing programs that will not foreclose after only 2 months of not paying
As a Filipino that born in a poor family but now living as a middle class , I don't like having debts. My siblings have their own house . I got my own property now. The Filipinos dont like putting their money to banks, I remember when a farmer wants to lend us money, they immediately gave us 100k. Despite the government initiative to encourage Filipinos to have their own bank account , some of us still have negative thoughts about banks.
Other countries are rich because they take advantage of banking loans. Having no access to banking products like loans keeps Filipinos in poverty. The country needs a big mindset change to debt!
inflation will just eat your savings. people need to learn how to invest.
if you keep your money under mattress, the money will lose its value cuz inflation, better keep at the bank at least you get interest to cover inflation.
@@chrisk7118 I beg to disagree because there are many loans offered by the government. There are also cooperatives that offers loans other than banking loan, which in my experience cooperative loans are far more better than bank loans, because all members of the cooperative ones the cooperative. I know this "cooperative" thing is foreign to western nation because it is somewhat similar to communist system that is in my opinion the western nation is missing out.
On the other note. I only borrow money if really really need it, not I will borrow money because there is a new phone coming out. And I really pay off my debt on time. I also think first if I can pay my debt on time and easy... Sometimes I wonder if western nations especially in USA if some of their people actually know what is financial management is because I noticed that Americans tend to have high debts and are struggling to pay it off, I will exclude here the people paying of their education debt because those educational debts are unwarranted and outrageous but hey that's capitalism for you... Some Americans also tend to go for the new phone I noticed, they will buy the latest iPhone in debt regardless if they really need it or not.
Banking institutions in the Philippines are quite behind in terms of policies.. those who don't have bank accounts and are hesitant to have one,.. i understand them.. banks in the Philippines are out of reach, tbh.. there's a lot to complain about ,
Malaysia and Thailand have almost similar household debt to gdp but 58% of our debt is for property purchase as opposed to thais With 38% . Most thAis borrow for personal loans meanwhile Malaysians borrow for house and car loans
its part of our culture to make sure our children wont have to worry about debt..
it is also part of our culture that lending/borrowing through relatives is a thing most Filipinoes rely on rather than financial institution. which is not considered in this video.
because borrowing through financial institution sounds risky rather than borrowing through a relative
Because of the greedy corporations majority of us are low income earners that don’t qualify for a loan. 2. Even if you secured a loan, the bank would only lend you around 20% of your annual salary. Because of economic instability the loan falls under high risk hence the astronomical high credit rate would be slapped on your loan 3. Our economy is supported by OFW remittances. Dollar to peso exchange rate has huge impact too as OFWs would use cash to build their dream house☺️
And more other reasons…
Job underemployment in the country, as well as plausible job offerings abroad really explains why people do not risk the loan. It simply is unsustainable if you cant get a well paid profession or job of your choice.
One factor to consider too is the cheaper and perhaps one of the most accessible commuter's system. People would rather ride bus and/or jeepneys for two hours or so almost every day from their home province to cities when going to work or school. So why buy expensive house in cities when you can still use a room in your ancestral house in the province.
95% of my debt is in my housing loan payable in 26 years. Other 5% hoes to tuition and company loans payable in 2 years. Im managing my earnings properly , i always make sure that 10% of my salary goes to paying my debt and the rest for daily needs and savings.
Or I can tell you that we Filipinos dont like debts. You have to understand our culture and not only analyze the data out there. Credit or indebtedness is something we always struggle to avoid. There is a simple explanation.
Filipinos when they get married, they don't buy a house righ away.
they could rent or stay with their parents till they have enough cash to buy a propperty and build their house themseles. we also got a habit of building a common room first then add another room as years progres
I am a stay at home mother of 3, I have 2 daughters in college and 1 in senior highschool. we have 0 debt because we only spend what we need and we live within our means.
I hate the housing bubble in the Philippines! This bubble leans more toward ex-pats and OFWs that are native to Metro Manila. Even my client who is a successful boomer businessman said the same thing when I asked him about it. lol But what I hate the most is that this bubble is destructive and not helpful bdw. A lot of land area is being developed esp farmlands converted to condo o housing. smh Also, I find it funny that the people buying these properties tend to use them for AirBnB/rentable.
Partly true but the thing is,, yeah units, condos are occupied.. but by who?? Most are owned, occupied by foreigners.. on a. Business perspective, theres no bubble,sure.. but if you stick on the definition of property bubble, with regards to the Filipino consumer.. there's a bubble as most cant afford to have their own home..
Only a few people really take out house mortgages and housing loans here since other than the very strict bank requirements and very prickly interest rates of lending agencies, rent is relatively affordable and housing plans like condominiums and let's say camella homes, the monthly installment costs around $450 sometimes without any downpayment.
Also the current millenial population (28-46ish) normally only had 2-3 siblings only, at least one of them would stay in the common house and at least another sibling would be overseas so there's less pressure to own a house
as a filipino i do see that very few people/households in here have very few bank, financial institution loans, lending companies here have a hard time finding borrowers that they would literally forgo background checks and would give you loans by just showing them 1 government ID. I remember when I was still a college student earning very little through my online shop, (around 250 usd per month) many credit card and lending companies would give me 2% loans with spending limit of about 10x my income each without even asking for my banking statement. I currently have 2 of those right now and they have been a huge help.
Housing cost in the Philippines is ridiculously high and increases per quarter year after year which is crazy and the bank is so freaking slow and strict in lending money.
You actually failed to mention this....
in the Philippines, those who have less, actually own some property (for free).
Those who can afford, are actually the ones who have bought some properties via mortgage.
People in the Philippines, who can't afford to buy their own property, do squat on gov't owned properties. When the gov't is about to use them, they get relocated, and they got to own that property. Simple way to own a property and avoiding mortgage to be honest. 😅
I'm Filipino, I don't have housing debt. I bought a lot for 200k in 2008,
got married 2020, and then put up an unfinished small house for 300k. It still needs finishing but it's way better than renting, or by a house from a developer.
Most Philippine houses are built in phases depending on the money on hand. Like modular like house. This means there is minimal need to borrow large amount of money to build a house. Thus lowering the household debt. Filipinos also are afraid of monetary debt but ate so happy to have other type of debt
i used to pawn my jewelries but since i fear sinking onto interest rates, the very day i got the full amount to pay my loan, i just go and pay it even if i just took the loan 2 or 3 days ago.
It's so hard to apply for loans, even credit cards, here in the PH. That explains it. And only a few among us resort to loan sharks because we are aware of the implications.
A lot of the houses or properties owned in the Philippines are still named under their parents/grandparents and sometimes under great grandparents. In the province, the heirs just don’t bother to document the transfer of ownership and when they sell their property, it’s at low market value and undocumented.
The last financial crises taught filipinos to live within their means.. and usually when in need, they would go to family for loans without interest usually.. sometimes without even meaning to repay it back
salary per month
worker 1: 5k - 10k
worker 2: 10k-25k
worker 3: 25k- 75k
worker 4: 75k- so on
if ur worker 1 and 2 banks dont just lend money for you to own a house. 30% of your salary is the highest you can loan.
worker 3, can use their goverment benefits called pag ibig fund but a lots of processing..
worker 4, they can buy a house no need to be in debt.
filipinos not afraid of dept, its just that the bank dont let you to have a debt that big.
In Philippines , even the childrens have own family.the still live in there parents. To escape mortgage fee. And also many filipnos borrows money to the money lenders person who don’t have license of SEC..
@jana catudan It's changing now a bit in modern times, at least in the cities. Most young people like to go independent now when they get jobs. But I agree that the "living together custom" is still the case in most provinces.
Low debt because I've never seen a credit rating service there. Lots of informal debt, pawn shops where phones are left as collateral, 5/6 loans from individuals, borrow 5 pesos pay back 6 pesos 30 days later, land pawned for seed or fertilizer with the loaner using the land until the farmer can pay off the loan if the loan goes into default. And per GDP, hell their incomes are so low, $200 a month is only a dream for many of them.
I paid off all my credit card debts in Dec 2019. But during pandemic, I applied one cc and got it for emergency purposes.
My grandma told me that if you have a roof above your head, has a job, you're not poor. If you have a big house, a good job, but has debt, then you're poor. 😅
Most of the Filipinos started with only what they can afford, and they will start from there. Together with the family they will create. It's not uncommon to see newly married couple starts with a nipa hut as their first home, and together, the couple will build a larger home over the years. We avoided debt as much as possible unless it's an emergency situations. And sometimes, even if its an urgent circumstances, we're still avoiding debt, because we only sells our valuable possessions that we have to finance the urgent needs.
We are not scared of debt we are scared of paying it
This video on expensive housing market is ONLY APPLICABLE to the two biggest metro cities in the entire Philippines(Metro Manila and Metro Cebu) where all the big businesses and mega corporations crowd to, however, everywhere else land value is very very affordable, I'm even quite amused that big developers are building condominium towers in my city where land is cheap and the only people who actually buy a condo in my city are those wealthier people who already own more than 3 properties who want a condo beside a mall or from Metro Manila or Metro Cebu.
I own a construction business focusing mainly on houses, and you might be surprised that A LOT of Filipinos are paying CASH or are paying for their properties at an installment in-house directly with private land or housing developers, I myself have acquired 3 different properties paid or is being paid with cash in my late 20s. Aside from that, Filipinos RARELY sell their family properties, they get handed down generation after generation, so Filipinos have that security that they have somewhere to live until they can save up enough money to buy their own lot and build a house on it. When an entire family gets down on their luck, at least they have a home and don't go living in the streets.
On housing loans, Banks and government housing fund agencies give out loan to Filipinos at a very competitive interest rate for up to 30 years to pay, which over 30 years become very small that people pay off their 30 year plan in 15-20 years, but securing a loan requires a lot of requirements especially the proof of income to assess that loanee's ability to pay back the loan, and will give out only a maximum of usually only up to 30% of the household's income. CARS on the other hand have become more expensive, but doesn't stop Filipinos from buying the latest model.
Credit card debt is also seen by Filipinos in a negative light, it may be convenient and easy, but for Filipinos it's "still debt", while other countries like the U.S. revolve around credit, Filipinos would rather pay cash or debit directly deducted from their bank account, and banks DON'T LOOK AT CREDIT HERE, they look at properties, assets, savings accounts, payslips, etc.; For a Filipino, if you can pay it now then just pay cash why add more steps to pay? And if you don't have the money then wait until you have money. I went down this rabbit hole and had dug myself into a very deeeeeep credit card debt, and no way am I gonna go back to that.
LASTLY, there are no student loans in the Philippines, but we have more affordable colleges and universities that even people below the poverty line can send their children to college through each college's scholarship programs for children of lower household income that offer free tuition for either keeping a grade average or by being a working student. Aside from that, a lot of Filipinos are paying for educational plans for their children's college education from the moment their child is born.
There are also these new small loans business that tie in with retail stores that give out installment plans on appliances, phones, computers, etc.; that only asks for a proof of income, a government ID, and personal references.
Household debt is low in Philippines because most people are not eligible to get a visa or MasterCard
Instead telling other to pay their Debt...Filipino should settle their debt first...💁
My guess is that it is a combination of things. 1. Relying on remittances and overseas workers, much of the household debt is held by workers outside of the country and wouldn't show up on the balance sheets. 2. The banking industry, most people don't have bank accounts 3. Lack of financial education 4. The Catholic cultural of the Philippines, that is it's God's will, what happens will happen you can't do anything about it, therefore don't plan 5. Filipino time that is showing up late is okay, not having the money on time for the loan payment that is okay, it is normal. 6. The Philippines once was a leader among Asian economies, then for decades and decades it stagnated, why do you think there was nostalgia in the election of Marco's for office, so you don't borrow and spend if thing are always getting worse in your mind.
Filipino parents/guardians/relatives mostly finance the education of their children. Student loans are unheard of or rare in the Philippines. Not sure if it’s the same for other Asian countries for comparative purposes . Also, from my own experience, as an Overseas Filipino Worker (OFW) for more than 18 years, I have/had short term personal loans in the foreign country I work in which is basically out of scope of the PH household debt. These loans were used to support education cost of family/relatives, for investments in real estate or businesses in the Philippines. This could be true for the majority of the OFWs out there who were/are able to buy their own homes and real estate investments and finance their businesses from personal foreign loans.
If I may also add, securing a loan is very easy here in the country I work in (just present a salary certificate, bank statements and letter from the employer) compared to getting a loan approved in the Philippines which could be very difficult with higher interest rates.
You can get house here as low as 120 usd per month 20 yrs to pay installment
There is low household debt in the Philippines because of low financial literacy
I live in the Philippines. Household debt is low as most build their houses by cash. Only a small percentage mortgage their houses.
we have been a "developing country" for so long, are we really even developing? more like stuck.
Too much shake up happened in the last few years. There were efforts to repay national debt, which probably worked. But prices of everything went higher. We still borrowed big money, plus other bad global events. So nothing gained for the individual. I hope it goes better in the following years.
We have socialized housing, very affordable and accepted to most working Pinoy.
Not enough creative entrepreneurs here in the Philippines. In other Southeast Asian countries it is more prestigious to start your own business than be employed. In the Philippines if you are employed in a big firm, that is what we call "jackpot". Also as Bob Hope would say, "Banks will lend money if you don't need it." Philippines is very conservative in lending. What is not documented is "5-6" informal sector as pointed out by LA somewhere in the buttom. The informal lending sector does not require any IDs, what they require is that you have a small time business (like a kiosk) and you are always present. I believe the informal lending sector is around 10%-20% a month. What is getting popular now is lenders make arrangement with the comptrollers to have their salary deducted and the deductions go straight to the lender.
Household debts is okay if you have high gdp per capita. It means ppl buy a house because they can afford it. Property is not cheap and most ppl need loan to purchase. And these property financing will take about 20-25 years duration. Ppl can sell their properties for profit after 5-10 years and the profit alone will cover the interest rates. Must be smart
My rule of thumb... If I cannot pay a housing loan for 5-7 years then I will not make a housing loan because only the banks benefits in these transaction.
@@sophisticatedsiomai3027 if like that more than half of the population can’t afford a house lol
@@namazlur78 I'm a busineman and that's how I do things. Even my car loan I don't want extended terms like 4-6 years because the banks make more money from me. 2-3years max on my car loan. Anyway most Filipinos cannot avail house loans since most cannot qualify so instead they save money and build small house and if their income increased then that's the time they will avail a house loan.
I have a high income, more than the average filipino, the tax I pay monthly is as high as 2 full time employees. But it was very hard for me to get a personal loan, and mortgage, it took me 2 months just to get approved on top of a lot of documents. Just immigrated to the US we only need SSN and any paper (no need to be official or certified true copy) showing monthly income that's it approved on the spot without the need for a collateral. In my applecation in a Phiippine bank with the same amount and the same income after passing so many documents and collateral still denied what the hell. It's a 100x harder to get a loan in Philippines and they give you very high APR or interest. Debt if used right is a good tool for financial growth
Thanks God I'm probably one of those lucky creatures back home having inheritance properties were gratefully thankful living in inter island provinces that properties are vast & the cost of living is low & the food was completely organic this probably talking about real estate in bigger cities in the Philippines,though living in nearby islands isn't that really difficult in the Philippines
Very informative. Thanks for sharing❤️
I'm actually happy the Philippines doesn't have that much debt. Because unlike massive powerful countries. We're a small corrupt economy that can barely pay off what debts we already have.
If we did take on millions of dollars in loans to improve our country. Half of it will go straight to politician's pockets.
70% of our debt and obligations are DOMESTIC.
If there's one thing that I can thank Pres. Ferdinand Marcos Sr. (I'm not praising nor condemning him, since he did both good and bad things, he's a complicated figure) Is that the debt and the millions of pesos he "allegedly" "stole" during martial law, was small compared to our other south east asian counterparts like Indonesia during the Sukarno Administration which Sukarno stole more money domestically than Marcos.
@@wills.e.e8014 You should not thank someone because they stole less from you compared to others.
@jana catudan Yeah sure
@@lukes.3488 agreed lmao. You don't thank a murdered because they didn't turn into a serial killer.
A $2000 (US) scooter is common to be financed and it will cost $3000 after paying off. More people own scooters compared to homes.
Ang importante nakakabili tayo ng mga basic goods…send are children to school…recovery lang ang utang debt cycle the government needs to make more aggressive move to stimulate the economy print more money and barrow ang inflation ay progressive pag may demand tumataas…consumer market na
One key reason you’re missing is that we Filipinos build homes that could last for generations. Btw, we also avoid debt like the plague!
We still live with parents because its ok in our culture
because filipinos majority will incur debt if it is really necessary, like building house but majority build their own homes, filipinos are not really into luxury items such as expensive clothes,bags and cars. most of the time filipino incur debt when some one from the family get sick because it is expensive, but majority will try its best to paid all debts as soon as could
Informal cat advances and loan sharing aren't really counted.
The problem is the informal economy is poorly monitored and understood.
In smaller businesses, workers can sometimes be a few paychecks advanced and in debt, paying it off slowly or simply defaulting when they move jobs.
Then there is the infamous 5:6 (20% interest) loan shark system, although it is not as common nowadays.
Loan sharks and asking for loans from your relatives are very common here, hence no recording/reporting to the government of some sort. For sure, the 10% value is highly underestimated.
Sounds wrong. I've worked here for over twenty years. Most people are in debt but it's in revolving debt to social security and the housing authority which give out personal loans to be paid over a 2 year period. They also borrow from loan sharks and payday lending companies. These abound in the business parks I've worked in and people give their ATM cards as collateral. Young professionals who are able to procure credit cards also rack up quite a bit of debt from conspicuous consumption. The only reason people don't do more is because a lot of Filipinos are unbanked. That puts the formal banking sector out of reach for most of them so they get salary loans from employers, 5-6 lenders and such.
Difficult to get loans here because of stringent requirements. Banks know that an ordinary salaried worker will never have the capacity to repay the loan. The cost of housing is too expensive compared to the average salary. Real estate (apartments, condos, lots) in Metro Manila are more expensive than those you'd find in other cities in US and Europe.
I’m one of those Filipinos that believes that zero debt equates to peace of mind and sound sleep. Yy
We also borrow money from within the family. Hence, the tendency not to go to lending institutions.
Filipinos of the middle and working class build their own homes which rely heavily on their budget. They prefer building their own rather than relying on bank loans.
I am disappointed that you didn't dive deeper into the Debt Crisis of the 1980's. Crippling foreign debt, low foreign exchange reserves and high inflation severely hit incomes. How could one even borrow when you had no job? I recall being a teenager during that time and I have grown distrust full of debt. Perhaps you should looked further back then.
One of the reason why Philippines has a low household debts, because if they have piece land, they preferred to build their own house by using their own money, to avoid paying in interest rates, for example, if you can buy 300k pesos a piece of land in 250sqm, and build ur own house amounting to 1.2million house. Instead of buying a house in subdivision that amounting to 3.5million pesos or even 4million pesos payable in 25 years. Therefore Filipinos are more wiser in their finances.
🤔 *possible houses are not affordable to many Filipinos but some richer family owned more than one houses/condos/properties... some housing maybe bought or on lease of foreigners... many families use to lease than to own a property because of certain reasons - like houses are not affordable and/or hoping that their children will provide the dream house in the future...*
Two things that you missed in this video.
1. It's incredibly hard to get a loan from a bank here ever since the asian financial crisis. Banks here are now extremely cautious.
2. Informal lending. Many Filipinos borrow money from illegal money lenders who charge very high interest rates because they can't get loans from banks. If you include this, household debt would be significantly higher.
Most Filipino can’t even qualify for loans. And most still prefer cash to pay.
Philippines greatly benefited on remittances too.
there was plenty of unofficial lending schemes, 5:6 for example, that hides some household debts from studies.